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September 21, 2014

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If NV Energy made too much money last year, should you get a refund?

NV Energy customers in Southern Nevada could soon get a rebate.

A state agency is alleging that the utility essentially overcharged customers and should refund about $10 million to Southern Nevada ratepayers.

The Attorney General’s Office of Bureau of Consumer Protection plans to file testimony with the Public Utilities Commission July 17 saying that NV Energy should give that money back to customers because state law doesn’t permit the utility to keep the money when the utility earned more than the utilities commission authorized.

It’s not simple, but the argument could put money back in your wallet.

Here’s how this works:

Under state law, NV Energy is allowed to charge ratepayers enough to cover costs and earn whatever the commission determines is a reasonable rate of return. The higher the rate, the more the company can take home in profit should it achieve that rate of return.

Last year, NV Energy earned $322 million in profit and exceeded its authorized rate of return.

The commission said the company could earn an 8.17 percent rate of return. The company actually earned 8.71 percent, which means it earned more than the commission authorized.

Now here’s where that $10 million comes into play.

NV Energy collected $10 million for so-called lost-sales compensation, which is money the utility charges when you conserve by using energy-efficient appliances, lightbulbs or home and business renovations.

In the utility’s words, this is compensation “for the sales it would have made in the absence of energy efficiency programs — nothing more and nothing less,” according to a recent filing with the Public Utilities Commission.

But a 2009 law allowing lost-sales compensation forbids the utility from using it to earn more than the commission says is OK.

“The whole idea of lost-sales compensation is to make sure that energy efficiency programs don’t somehow deny the company the right to earn a reasonable return,” said Dan Jacobsen with the Bureau of Consumer Protection. “It’s just fair to give this money back to consumers because the intent of the bill was not to enrich the company but just to cover costs.”

The utility doesn’t plan to immediately issue any refunds.

The company will have a chance to issue a rebuttal to the Bureau of Consumer Protection on July 31. Then a utilities commission officer will listen to both sides during an Aug. 7 hearing and make a recommendation to the full commission.

After that, the commission will decide whether to adopt, reject or modify the refund proposal.

Until then, NV Energy said it doesn’t want to comment.

“It’s inappropriate for us to speculate not having seen the (Bureau of Consumer Protection) testimony,” said Andrea Smith, a spokeswoman for NV Energy.

This fight is essentially a continuation of a simmering tug of war between the utility and the Bureau of Consumer Protection.

Last year, the consumer advocate argued that NV Energy was receiving more revenue than normal because of an extra hot summer in Southern Nevada that caused people to spend more to cool their homes and businesses.

But in December, the commission allowed the utility to collect $10.2 million from its customers for electricity they never used.

Now, Nevadans know more about the situation, Jacobsen said.

In February, Jacobsen told the Sun that “consumers should not be required to provide lost-sales compensation if the company is earning more than the commission authorized at the most recent rate case.”

NV Energy manager Patricia Franklin said in a March filing with the utilities commission that the company did earn more in 2012 than the commission authorized. Specifically, that’s the difference between the 8.71 percent rate the utility earned and the 8.17 percent rate the commission authorized.

So the consumer advocate is moving forward with the case for a refund and intends to file its full testimony by the July 17 deadline.

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  1. NV Energy...

    A Monopoly making Monopoly money.
    I wonder how much 'executive compensation' their CEO will be showered with this year?
    In the past 2 years combined, that number is close to 15 MILLION dollars.

    http://insiders.morningstar.com/trading/...

  2. gmag39,
    If, as your first sentence alludes, you believe U.S. currency is indeed "Monopoly money" in the sense of the game then would you mind giving all yours to charity?

  3. I think giving back a rebate may be time consuming. What would be more efficient is to figure out the amount owed per customer, and the amount is taken off their next bill. Refunds should be given to those who no longer have an account but did during the year where overage was charged.

    What a cute mess.

  4. I don't know why NV Energy would justify it one way or another. Just say thank you. Any way you spin it the result would be they keep the money. Why should they be different than any other business. You have just been handled, citizen.

  5. I wish I had "lost sales compensation" in my company. Sure would make things easier!

  6. What a racket. Lost sales compensation should be criminal.

  7. It is criminal to charge consumers for a product or service that they did NOT consume.

    Furthermore, I see this act that NV Energy did to INFLATE their perceived earnings, so that Warren Buffet would look at the potential to skin the ratepayers here in Southern Nevada without much resistence. The ploy with the PUC only demonstrated how much influence NV Energy has to continue doing such atrosities against helpless ratepayers. SHAME SHAME SHAME

    There is so much going on behind the scenes that the everyday citizen will never know or hear of.

    Blessings and Peace,
    Star

  8. Is NV Energy South a seperate entity from NV North ?
    Just wondering how they seperate the profits..

  9. Just wait until you see what will happen to your rates, now that SB123 and SB252 have passed. NVE claims their Base Tariff will increase by only a small percentage. It has been legislated, that when NVE purchases renewables to meet NV RPS requirements, they can recover costs quarterly, when they purchase from their OWN solar/wind projects! This is by design, in SB123.

    Nothing like being handed a couple of million captive customers, and being guaranteed a profit. That's not free market--it's crony capitalism. We have no choice from whom to purchase our electricity. Why do you suppose Warren Buffett is acquiring NVE? MidAmerican is totally into utilities--they are a guaranteed income source. MidAmerican is also into solar and wind.

    Contact your state legislators, and Governor Sandoval. Ask them why they would put such a burden on NV rate payers, both commercial and residential!